Accounting SB Ch 8 & 9

Which of the following correctly describes a cost that would be properly classified as overhead for a manufacturing company?

All costs necessary to manufacture a product other than those that can be directly linked to specific goods.

Accounting for inventory is an important topic because correctly measuring inventory affects both the, ,through ending inventory and the,,via cost of goods sold.

Blank 1: balance Blank 2: sheet Blank 3: income Blank 4: statement

In a periodic inventory system, purchase returns are closed to what account at the end of the reporting period?

Cost of goods sold

Where can freight-out charges be found? (Select all that apply.)

Cost of goods sold Selling expenses

What is included in the cost of merchandise inventory?

Necessary costs incurred to get the goods in location for sale. The purchase price of the goods.

Match each inventory system with the method for recognizing freight-in on purchases.

Periodic inventory matches Choice, A separate freight-in account is used. A separate freight-in account is used. Perpetual inventory matches Choice, Freight is added directly to the inventory account. Freight is added directly to the inventory account.

When merchandise is shipped f.o.b. destination, who includes the inventory on their balance sheet when the goods are with the common carrier?

The seller

True or false: Goods on consignment should be included in the inventory of the consignor even though not in their physical possession.

True

The measurement of inventory and cost of goods sold starts with determining the physical quantities of goods in which of the following systems?

both the periodic and perpetual inventory system

Weighted-average unit cost is determined by dividing _____ by quantity of goods available for sale.

cost of goods available for sale

Western Company begins the year with $50,000 of inventory on hand. During the year, Western purchases additional inventory for $100,000 cash. Sales for the year, all on account, totaled $70,000. A physical count determined the cost of inventory at the end of the year to be $110,000. Assuming Western uses a periodic inventory system, the journal entry at the end of the year once the physical count occurs includes which of the following? (Select all that apply.)

debit inventory (ending) $110,000 debit cost of goods sold $40,000 credit inventory (beginning) $50,000 credit purchases $100,000

When a company returns inventory to the seller, net purchases

decrease

Which of the following costs would be properly classified as manufacturing overhead? (Select all that apply.)

electricity to operate facility depreciation of manufacturing equipment

The cost of inventory includes (Select all that apply.)

expenditures to acquire the inventory the cost to bring inventory to its desired location

the _____ method of recording purchase discounts, subtracts the discount from total purchases to determine net purchases.

gross

Estimated future sales returns must be (Select all that apply.)

included in ending inventory deducted from cost of goods sold

Cost of goods sold is typically the _____ expense in the income statement.

largest

Inventory for a company consists of raw materials, work in process, and finished goods. (Enter only one word.)

manufacturing

Discounts not taken are reported as interest expense under the ____ method of accounting for discounts. (Enter only one word.)

net

In a periodic inventory system, the inventory account is _____ and cost of goods sold is recorded _____.

not adjusted as purchases and sales are made; at the end of the reporting period

The gross method views a discount not taken as

part of the cost of inventory.

Under the ____ inventory system, purchase discounts are treated as a reduction in the inventory account. (Enter only one word.)

perpetual

Those costs that are included in inventory are referred to as costs.

product

Generally, product costs are expensed when the related products are

sold

Donald Company purchases and sells inventory f.o.b. destination. On December 31, the company sells 10,000 units and receives notice that 40,000 units have been shipped by its supplier. Which units should be included in Donald Company's ending inventory?

the 10,000 units sold

When merchandise is shipped f.o.b. shipping point, who includes the inventory on their balance sheet when the goods are with the common carrier?

the purchaser

If goods are shipped f.o.b. destination, at time of shipment

the seller still has legal title of the goods.

When a company determines the quantity of inventory items, it must consider (Select all that apply.)

units on consignment. units in transit. units it currently possesses.

A company is most likely to utilize the specific identification method if its inventory consists of (Select all that apply.)A company is most likely to utilize the specific identification method if its inventory consists of (Select all that apply.)

very expensive products. unique products.

Raw materials inventory consists of the cost of units that

will be used as components of a manufactured product